Honolulu consumers may be finding prices more affordable as inflation continues to ease under the weight of the Federal Reserve’s aggressive campaign to increase interest rates.

Oahu’s rolling 12-month inflation rate fell in March to 3.3% from the prior 12-month measurement of 5.2% in January, according to a U.S. Bureau of Labor Statistics report released Wednesday. Consumer prices increased 0.6% in March over the past two months.

The Honolulu numbers are tracking the national trend that saw prices rise 5% in March over the past year and edge up 0.1% from February to March.

“Honolulu inflation has been slowing down since May 2022,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism. “The 3.3% inflation rate in March was on the mark of our expectation. DBEDT forecasted 3.1% inflation for 2023. Inflation in March 2022 — exactly a year ago — was the highest in 40 years at 7.5%. We are expecting to see the inflation rates in Hawaii at the range of 2% to 3% in the future months of this year.”

Still, just because the rate of inflation is diminishing, it doesn’t mean prices are getting cheaper.

Energy rose 5.4% from a year ago with electricity prices contributing a hefty increase of 15.7%. The cost of apparel soared 15.4% while the cost of food and beverages rose 4% and housing increased 1.9%.

Taken in smaller increments, however, the news is encouraging for some categories. Energy fell 3.5% over the past two months with electricity declining 4.1%. The price of gasoline was down 3.2% over that same period, and food and beverage costs decreased 0.2%.The cost of housing was up just 0.8%.

Fed officials have projected an additional quarter-point hike next month.

“I think the Fed will slow down and reduce the magnitude in raising interest rates this year, though the interest rate is still much higher than the (Fed’s) target rate of 2%,” Tian said. “This may avoid the possible economic recession in the nation. The inflation data is good news.”

Kailua resident Greg Tiburcio, 67, a retired defense worker, said he’s had to be more prudent in how he spends his money.

“My dollar has been going less further because the cost of all the products that we purchase cost more,” he said. “We’ve had to make some adjustments here and there in our expenditures as far as basically driving to and from (places). We have to plan a lot better not to spend so much on gas because gas is one of the concerns.”

Tiburcio said, however, he’s fortunate in regards to purchasing food because he has the option of going to the commissary because he’s retired from the military.

Still, not everyone has been strapped by the rising costs.

Larry Masuno, 74, a retired Navy civilian shipyard worker living in Kailua, said he has been affected “minimally.”

“We don’t eat out as much because the food prices are pretty high. So we try to eat in more,” Masuno said.

Kailua resident Paul Levitt, a semi-retired adjunct professor of visual arts at Hawaii Pacific University, said inflation hasn’t had any impact on him except “maybe things are a little more expensive at the grocery store.”

Other than that, he said, “inflation hasn’t impacted me at all — zero. I’m going off to Paris soon.”

Levitt added that people were able to save a lot of money during COVID-19 “because there was nothing to do. A lot of people put away money.”

Honolulu inflation was below the national level during 2021-2022 and will continue to be below the U.S. average for the next few years, Tian said.

“This is because Hawaii is still recovering from the recent recession caused by COVID while the U.S. economy has been fully recovered,” he said. “Hawaii’s lower inflation was mainly from housing. Inflation in rent of primary residences in Hawaii has been lower than the U.S. during the pandemic. In March, the rent of primary residences in the U.S. increased 8.8% while Hawaii rent increased only 2.0%”

Paul Brewbaker, principal of TZ Economics, said Honolulu’s continued decline in inflation is “exactly what I expected.”

“Consistently in the now 2-year-old transitory inflation surge the pessimists have told a story about inflation expectations becoming unanchored (never happened), and about how the supply shock factors (supply chain restoration, Russian invasion of Ukraine, Avian flu, etc.) were going to be overwhelmed by demand side factors (tight labor markets, two job openings for each unemployed person including in Hawaii, irrational fears of a “wage-price” spiral),” he said in an email. “Instead, my expectation of an inverted V-shaped trajectory has been validated.

“For Honolulu, inflation started after March 2021, following two years of excessive fiscal stimulus. Maybe $4 trillion in stimulus would have sufficed instead of $5 trillion between March 2020 and March 2021? Honolulu inflation peaked in March 2022 (and) has not quite completely dissipated through March 2023.”